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Squawk on the Street

News/Business. Melissa Lee, Carl Quintanilla, David Faber. Opening bell market action. New.

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02:59:59

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mpeg2video

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ac3

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480

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Us 36, Google 18, John Boehner 16, Boehner 15, Simon 14, Washington 13, U.s. 11, Geico 10, Ben Bernanke 9, America 8, Belize 8, Rick Santelli 6, Miami 6, Schulze 6, United States 6, Apple 6, Melissa 6, Elon 5, Gary 5, Softbank 5,
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  CNBC    Squawk on the Street    News/Business. Melissa Lee, Carl Quintanilla,  
   David Faber. Opening bell market action. New.  

    December 13, 2012
    9:00 - 11:59am EST  

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amendment you didn't learn. >> i thought he was great yesterday. >> he was great. he answered all your "new york times" questions, the inequality one, lobbying one, the fracing one, you tried. you were the foil. >> i give him an enormous amount of credit, thank him for the interview and hope he comes back again. >> we got to thank these guys. join us tomorrow. squawk on the street is next. take a look at how we are setting up on this thursday session, the day after the federal reserve decision.
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a lot of economic data out this morning, jobless claims coming in better than expected. core ppi in line with consensus. retail sales light. as for the picture in europe, take a look there. really following the cues of the u.s. markets this morning. our road map today starts with the fed announcing a new round of stimulus as chairman ber bernanke warps the fiscal cliff is hurting growth. house speaker john boehner expected to talk on the cliff talks 11 a.m. eastern time. >> told you this week, of course, they were talking actively, now, sprint/nextel offering to purchase the other half of clearwire it doesn't own. >> surges of best buy surging on reports that the founder is on the verge of making a formal takeover bid. >> and google maps has found its way back into apple's operating system. >> of course, we have to start off with the markets. dow's five-day winning streak has been snapped, despite the fed announcing a new round of stimulus. chairman ber bernanke say worries about the fiscal cliff
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are resulting in softer business environment and waning growth. members of congress told not to make plans for the christmas holidays, citing the urgency of striking a deal to avoid the fiscal cliff. the speaker set to given a update out state of negotiations with the white house in two hours. we will bring brink that to you live t did the mark it's job to deal of what happened with ben bernanke's comments and now the target in terms of tying interest rates to unemployment, which is a very new and big development for the fed. >> cnbc is talking over and over again, 2 million jobs to be lost, not if but when we go over the cliff. ben bernanke is listening to what this network is saying, recognizing there is going to be a dram mat hillsborough county job loss if we go over the cliff that is force austerity, that is firing people. look at spain when they got serious. italy. it meant a lot of firings. he says i see what we are going to do follow these countries that have fiscal responsibility a lot of people are going to be fired. don't worry, i'm going to do my
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best. what what are you going to do to keep people employed? >> keeping the heat on congress, came up a number of times, of course energy the press conference that followed the fed announcement but unclear what impact it will have. >> and as far as ben bernanke can do only so much he can do we all know the market's addition to the additional stimulus and the more -- increased transparency in terms of what the fed is going to target in the future, that causes the stocks to go up for maybe an hour's worth of time and then resume trading as if nothing happened. >> in the years i have been following the fed there is always a strange dichotomy, seems like the market initially gets everything wrong. but what i have always felt, in the end, we take solace, if the fed says things are getting better we get nervous. say things are -- says things respect good. when you decide to target unemployment, what he is saying, listen, things are gonna get bad, initial reaction, oh, good, going to support stock values, fall back on the idea that stock
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val ruse supported by profits, stock values supported by how much competition bonds have, make that easier, but i came back and i said, wow, i guess he is really worried. he sees the -- mentioned directly the small business sentiment, mentioned directly consumer confidence. i says, geez, maybe i'm too complacent. maybe i got to be more worried. >> keeps in place, not that we had any doubt that it would be in place but seems to endlessly keep in place this dynamic in the mark that's we have seen over this last year or two i would argue is one of the key oneser the ability for corporations to borrow at extraordinarily low rates, some way, return the resulting increase in free cash flow to share holders in the form of buy backs and special dividends. but not to hire. >> not to spend the money. >> and sandy cutler on "mad money" last night, this is the guy who is now the head of eaton cooper, they call it eaton, saying construction is better, where i'm seeing some, some
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positives because the fed. we saw a number today that dazzled me, southern california best home sales in six years. >> have we ever gone into a recession when the home -- when the housing industry, excuse me, is on an upswing? it is a huge part of the u.s. economy. obviously, if you just look at the breakout, only 10%. but the spinoffs of housing, automotive, very good, both in bull market mode. i attribute a lot of that to what the fed has done. gave lot of credit to the fed, perhaps, but also feel the debate shifted yesterday in washington. i began to hear way too many people say, you know what the president is curiously unengaged when it comes to cuts. i have always felt the president had the upper hand in this debate. i listened to bernanke and bernanke says, listen, i know they aren't going to come to deal. i see a lot of republicans on air saying we start to understand what they are they want as cuts. not hearing anything from the president. made me feel grim about the fiscal cliff, good about what the fed wants to do, very grim
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about the power of the fed, beyond what it's already done. >> the "wall street journal"/nbc news poll of americans about the fiscal cliff, some very interesting findings, just to that point, jim, two-thirds polled want congress to strike a deal and cut the budget, even if that means social security and medicare cuts. so, according to this poll, the people are saying, yes, go ahead, cut entitlements and say that obama has a mandate, among those that did not vote for obama, they have -- that they say that there is a mandate of obama to actually raise the taxes on top earners. >> i think a mandate do both. the fed -- a lot of people blame the fed for everything, seems a little ludicrous, what the fed is saying, listen, guys, compromise and if you don't, you got to expect stocks to go down. consumer confidence coming down, small business coming down, compromise or else here is the future. the future is lower stock market. >> right. >> so i think that there is a -- there is a very funny thing
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going on. we have rich people coming down to washington saying, listen, we will take our taxes but got to give a compromise. there's this curious where's tim geithner with specific doubts really get this thing going? what do they come up with? what did eamon javers come up with the other day? raise taxes a little less than you thought. he comes out and says, listen, medicare, make it this new able. we'd deal. but it's the president that is -- >> a deal if it gets done, how you get there is a question mark. does he finally need to know they are going to proceed to the increase in tax rates that he wants or close to it, then come with the spending or what comes first? >> the chicken and egg, we are starting to lose interest in the chicken and egg. >> who knows what goes on on the calls described as tense between boehner around obama. >> move on to a story we told but earlier, a story we have been talking about since that fascinating deal between sprint and soft bank was first announced back in october. we are talking about sprint this morning and 13 d filing saying,
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yes, it does want to bite remainder of clearwire that it doesn't already own. give you some of the stats right here off the bat. it would be about 2.1 billion in cash sprint would be parting with to get the deal done, 2.90 a share for each share of clearwire. held by thec and large shareholders such as intel and comcast are bright house, time warner cable already having sold, eagle river already having sold it would be subject to review by soft bank, something we reported on tuesday. we told you this deal was coming. in fact that their talks had reached a very significant stage and another key to the deal would be that it would require the softbank deal to happen, sprint doesn't want to be out there alone suddenly having to buy clearwire around spending all this money that, again, not unexpected. but a significant increase in clearwire stock prices taking place since the sprint deal was announced. as i have been reporting at that time and of course followed up on tuesday, they did want to and do want to own clearwire.
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they want the spectrum, most importantly, to add the -- what will be the sprint/softbank deal, because the man who will run this company, sprint wants to offer lots of new services, compete with verizon and at&t, be creative. in order to do that you need the bandwidth, you need the capacity u >> why is the stock in your opinion, trading at $3.11, not at 2.90? second, where -- i wanted to thank you for clarifying a level that is far more realistic than what wall street was looking for. a firm saying $5 bid, a lot of irresponsible on the part of brothers, get things exciting here but i try to measure 3.11 versus 2.90. >> tuesday, we reported the deal was near, i said roughly $3 a share that is -- 2.90 is. some people coming out $5 that is not in the cards. softbank would need to sign off on t they are going to be price disciplined. the fact is even though you do
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need a vote of the majority of the minority under the shareholder agreement currently in effect, not the sprint shares that are owned, they have a lot of rage has a lot of leverage, the way it goes. the fact, that is what you get into when you have a company that is already a voting control by sprint. but we will see. you got a special committee of clearwire's board that is -- >> review this conflicted, not conflicted. free port. >> not free port. they are going to weigh in. do you get something that might be higher than 2.90? certainly could argue you go up. 500 until synergies, you are talking 750 million shares. dollar-wise, given everything already put in here, everything happening, it is not that significant in terms of actual money but at the same time, you know, they are not going to go well above 3 bucks. >> at the end of the day, does this help sprint compete better the verizon tremendously? >> it does. but even more deals they need to do down the road. >> this is national footprint,
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not available to sprint without clearwire. >> correct. their strategy all along. i should point out, my sources indicate that if and when do you get a clearwire deal agreed to, you still would not see it closed potentially until june, just so people know. a lot of state approval is needed in this. the de the deal closes in april. something down the road to look at to your point, melissa to add more of that important bandwidth and spectrum. >> what was his quote on the initial it deal, said something like i am a man. >> a man. >> i'm a man, i'm a man and tell you so apenc davis group kind of thing? >> not forget the bonds on clearwire. because that is -- again, since the softbank deal was announced, benefited enormously, now sprint's credit rating
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are/softbank's behind clearwire. that has been the trade. in other words, the other way, so you're making the money as the yield comes down, the price soars. >> didn't possible to a knew two years, clearwire would have been in a chapter 11 situation? >> even sooner than that. that is the leverage here. they have liquidity issues. significant liquidity issues. even if share hold ers do vote it down, the majority/minority, the shareholder agreement does expire the end of next year, sprint could always come back. >> let's talk about shares of best buy, we are seeing this stock soar in premarket trade. according to the minneapolis star tribune, the retailer's founder, richard schultz, will make a bid for take jove they are week. in the 5 to 6 billion range before fully financed and could come as early as friday. david, i think you have done digging on this. >> i cannot tell you whether it is true or not a surprise to many people out there but that being
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tribune, the home paper for best buy, stories dead on, ears little not so much on. there is a deadline it is december 16th for him to come with a bid. if i he does come with a bid and rejected, he has the right to come back with another bid in january. do you make a bid in december and come back in january knowing what christmas sales will look like? whether or not this is true or not true, we will bring it back. >> what is the record of deals that get done in a dedeclining cash flow situation where it is not strategic, a la clearwire? >> i don't have any idea. >> must know, the minneapolis tribune must know, they are down the block. >> you are asking a -- this is still a big check for private equity. it is financing that is most
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likely could get done, a difficult one because of what you said. generate august lot of free cash flow, not the right way. for private equity to step up in a situation like that even with schultz rolling in his ownership stake, even at $16 or $17 a share, still 1.5 billion that you would need -- hard to imagine but i don't want to, you know, we don't know. >> if you were putting a bid in as a place holder before the deadline, how long beyond that? just wondering if the that would include the first -- the fourth quarter sales, get any indication on best buy's sales? >> that would be the key. would want to do that so you would get a look at christmas, adjust or wanted to walk away. >> possibility of the employees kicking in. thinking of carter holy hail, a terrible deal in the '80s, tribune corps.
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>> coming out of bankruptcy? i a week or two >>ment is that something? stay focused on these. the money could come from, unfortunately, think you work at best buy -- >> one hopes. one these doesn't happen. >> when companies are desperate to do a deal. >> more likely -- by the way, don't know how the board would react either. i'm still somewhat dubious. we will see. >> right. okay this morning, a company backed by millionaire elon muss sex going mub. we are talking about solar city, known for solar panels, musk, who is the company's chairman and ceo, lyndon life, will join us this hour. nship.
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google maps returned to apple's i phone and ipad. google maps replaced the default application with its own app but that was a target of widespread criticism. the google maps available as a download from apple's itunes store. so it is available as a download. i mean, does this change anything, jim? >> google is huge. >> yeah it s >> apple -- are we really trading on every little review now? oh, wow, google maps. there is a un -- really an unreality about these stocks. they should not trade on whether google maps is sudden lynn better than apple maps, should be trading on profits, earnings. google missed last time, apple
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missed twice. maybe apple doing better. we look at the review and say i got to take out some google. it is not going to drive google's earnings, if you -- display ad does drive google's earnings but nothing to do with display ads, sit there and think maybe am, people will buy it, maybe not, but the idea that google is up big and apple is down big just shows you how fanciful this market can be versus the reality. makes no sense. >> google could drive a lot bigger margin if they wanted to, fascinating company, i agree. >> all the thing these give away for free they could possibly monetize u >> kansas city, delivering one gigabyte for $30 a month. so interesting to follow this company, generating enormous amounts of cash flow. >> trade off of that. invest in it, they are investing so much in the future. the idea of a superior map product driving google over 700,
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starting to climb back where it was after that horribly disappointing quarter? i got facebook at 20. i get that. facebook said we got a way to monetize, but the idea, wow, you know what, those maps, which we know are superior, we should buy google off it? >> maybe just the people are taking money out of apple and putting it elsewhere in technology and that could be google. >> talk about data points that change every single day apple trades, one day, sales are strong. next day i'm -- minisales. >> blah blah. >> cvs, the quarter better than expected. don't trade off of whether the "times" says says that google is review. that's how people get hurt. >> last night on "mad money," cramer set the record straight on market misconceptions surrounding the fiscal cliff. he is about to give you the head start investors like. find out about it next in this mad dash. >>. how will solar city fare in its debut this morning?
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chairman elon musk and lyndon rive will join us on cnbc. we count you down to the opening, the s & p losing less than one. if you think running a restaurant is hard, try running four. fortunately we've got ink. it gives us 5x the rewards on our internet, phone charges and cable, plus at office supply stores. rewards we put right back into our business. this is the only thing we've ever wanted to do and ink helps us do it. make your mark with ink from chase. we create easy-to-use, powerful trading tools for all. look at these streaming charts! they're totally customizable and they let you visualize what might happen next. that's genius! we knew you needed a platform that could really help you elevate your trading. so we built it. chances of making this?
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and now trade up to get a 2012 chevy silverado all-star edition with a total value of $9,000. from outstanding value to standing the test of time, chevy runs deep. time for cramer's mad dash ahead of that market owe. we wanted to talk technology. so often, jim we talk about technological advances in this country, we think about apple we think about google, we don't think about fracing. >> mark pap parks eog, perhaps
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the company most responsible for the reversal in how much we produce in oil is now talking about going back to the 1960s, no longer the 1990s, 1960s in this continent. why? because of horizontal drilling. able to go down and then boom and boom p and he is putting people to work. what i'm strucking with is the claims are really bountiful this morning, much better that i thought. the unemployment claims. lower number. it really back -- sandy seems to not knocked out the economy. it is 'cause of companies like this okay? and eog can only be stopped, our companies can only be stopped by hiring by one group of people, the people in washington, because this bountiful fracing technology story, which i know the sierra club may not be in favor of, if you want to hire people this industry is higher, he is building rails all over, he is building a rail down to here, putting real people to work, that's why the claims are not bad but without a deal, these executives, behind scenes,
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they will tell you. this doesn't matter, without a deal. >> oil more than natural gas but all know natural gas is also fueling employment increases as a result of some manufacturing. not that much. fertilizer. chemicals. >> chemical industry. this is one of those things were i think there's so much spending that could be on hold by corporations, simply because the government won't cut spending. so i bring up eog as the par crime dime of our new american society, not apple bringing -- doing -- >> this is not trading on fiscal cliffs. this is going up regardless, isn't it? goes up more if we get a deal? >> we get a deal, people will say we are going to return to some growth because right now what this is you find oil in america and you price it off brick, which is just a huge differential, but these guys are just like all the other guys i talk to behind the scenes, great growth, oil is going to up, whether we like it or not but means that eog is a growth stock, 20% growth and deer is was to trade much higher. without a deal, not going to pay up for it. that's what i feel.
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>> one day later than planned, solar city is going public. elon musk is the chairman, lyndon rive is the ceo. they are going to join us both to discuss that initial public offering. the opening bell minutes away, get ready. another big day of trading ahead. more coming up, "squawk on the street."
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watching cnbc's "squawk on the street," live from the financial capital of the world, waiting for the opening bell to ring on this thursday date after the fed meeting. jim, get this, it is going to be the four-year anniversary of the close to zero percent interest rates, on the 16th of december. since then, the markets have just skyrocketed. the nasdaq is up by 90% over those four years. the s and p 500 up by almost 57% over those four years and the dow up almost 49%. >> you take away the competition in the supermarket of finance, you make it so that interest rates are simply not competitive and the money is going to go to general mills, nine times out of ten, go to verizon, nine times out of ten these become bond
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equivalents thanks to ben bernanke. ben bernanke is behind a lot of what you can say a bull market. not taking credit for it because that looks awkward. fed chief wants to talk about zurich. exuberance, irrational. but i think this this a one for one, because you just should be in pfizer and out of treasures. one's got a better balance sheet than the other. it happens to be pfizer. [ bell ringing ] >> bell ringinging on wall street. [ inaudible ] solarcity celebrating its ipo today. we will speak with them in a few momentses that. deblind one day. raising much less capital that had been previously expected but the low down straight from the top management team in just a few moments, as we await that stock.
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>> talking about energy being keeper in our country there is a move to make it is our country is the lowest cost energy producer. solar come down so much in price. this is another bull market a bull market in cheap energy. >> still need the government's help to make that happen. >> can't be reliant. >> i don't necessarily think a bad thing. >> you want to pick industry winners but just saying
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constantly, hear about things going down. >> why costs have come down. >> i do know what did my kids want to give me for the holidays? a solar panel. >> they want to power you that way? >> enough shine on my head a small city i could heat. i'm talking about my house. >> old franken, remember when he used to put the -- senator now, of course. >> i struggle to come one positive stories in the face of the cliff, great energy, costs coming down, housing doing better. all things blunted with no deal. a deal comes and the market makes sense. as it did with the debt ceiling. before we got the debt ceiling, we'd nice decline in the market. >> what happens to those government subsidies, a big question for this nascent
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industry in the united states it is a work-around of our aging grid. >> make utility companies allow you to do this with a rebate. i have a very good friend who has a totally off the grid house that he powers, that he would like to sell power back to pennsylvania. >> why is your friend off the grid, just curious? because? because -- >> he wants to produce enough electricity through geothermal and wind he can actually contribute to lower costs, to sell it back. and that's not the way our country is set up. rather than that -- i would like to see the utility companies embrace this, what crane is talking b remember, he runs a utility, rather than the government being involved. i do come back, a deal do the does change things about it is a pe, a priced earnings multiple lifter, a deal, even if it happens in february. right? >> yes. >> you and i were talking off camera about the idea, jim you don't say it is january 3rd off
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the cliff. it is some time in february, we get -- >> a deal, have as much impact. >> i think that's fair. >> not coming to a screeching halt in january 3rd, whatever day things start up. >> business struggling. again, these claims, we are on the cusp of -- i don't call it boom but a very study growth economy, expect then bernanke saying consumer confidence, small business confidence, not because of what's happening in housing, automotive and energy. those industries want to take off. they all want to take off. >> it is interesting, we were talking about zurich before the opening bell, zero interest rate policy, of course, going into another year do we at all consider the idea that there is a bond bubble and that it will finally burr sns. >> yes. >> an interesting panel at the deal book conference yesterday, shah wartz on it ray dal yo, i like to hear, bridge water.
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>> feel good he wants to buy agricultural land in australia? >> i said trades are going to go off and the surprise they could go up dramatically, franticly trying to lock in the low rate, antithetical what-to-what the fed said. 3 1/2 is not going to go to 2 and want to take advantage it is the bubble, my bubble, i can cash in on t >> right. of course, another impact on the budget as well, 250 billion dollars in interest costs because it's so low right now, quickly go to 4, 500 billion. >> the fed -- interesting the fed bought 2 trillion of bonds, which is really the deficit between when we got to 2010 deal for -- 1 for 1. the fed buys, we print, the fed
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boys. 90% of the bonds are being bought by the fed, where would rates be? >> right. >> spain. spain? buying bonds one form or another. le ends eventually. my dad had the guy. bill for the house we bought and a rate i used to marvel at when i tried to buy a house the first time in the '80s. we are at the gi bill rates the guys came back from the war. >> bob pisani is here this morning more on what's moving. hey, bob? >> let you know about an ipo pricing down here, pbf energy here operation 20.5 million shares at 26. this looks ready to open at 28. the book is frozen right now so that means that the -- the specialist you can the dmm here has indicated the final price is in, it looks like pbf is going to open right now at $28, one of two ipos down that are priced
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today, solarcity pricing over on the nasdaq that is not yet open. get to more on that shortly. guys, mentioning when will the bond bubble burr president? big topic overnight that i was getting, at least. the feds actually yesterday, yields spiking up, reignited this debate. remember, this was the big call at this time last year, 2012, the year the bond bubble burst. by the way, it hasn't abated. it has continued into the fourth quarter of this year, despite other people's predictions. seen continue outflows in stock mutual funds, the call for 2012 the wrong call, reignited, you mentioned ray dal yo, dave rubenstein talked about how the next fortune would be made on getting the turn right, he didn't predict when it would
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happen easier either. out of treasuries into stocks remains a very hot topic. also out of junk bonds, where do you go from junk bonds? some people were mentioning floating rate debt, you will hear about this in the next couple of weeks. speaking of the fed and what it is doing it is killing profits for financial companies. did you see met life what they came out and said? low interest rates are continuing to hurt our earnerings and our returns. met life gave guidance for 2013 that was well below ex-spec ache, it although kind of expected at this point. a 5% rise august ten-year yield of 1.65%, analyst assumptions based on the guidance the company gave. bottom line here, guys, this low interest rate environment, very, very tough for financial stocks. back to you. >> very, very tough. thank you, bob, for financial stocks. talking about the rates you can get. they can't make money.
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we can. consume verse to tars have too advantage of this part of the boom we can see. optimistic longer term. shift to bonds and the dollar. rick santelli at the cme group in chicago, terrific commentary this morning about selling bonds and buying bonds and who they are, rick, i love that exchange with that gentleman next to you. >> thanks, jim. i tell you what let's stick with that theme. you know, there's always been this very tight relationship between the safe harbor instruments, whether you're looking at boons, whether looking at guilts, whether looking at treasuries, but things are changing. look at the spread spread between ten-year german boone and u.s. ten year, it is getting close to 40. that's year-to-date. the dynamics are changing as we know. we just heard bob pisani, see what going on with interest rates. 170, the chart up, closed at these levels since early no the 30 year, more exaggerated, makes sense. remember, on the yield curve, the 30 years is like the last
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scare the on the rope you are pulling around, whips around a little bit more, the highest yield, should it close up above these levels, 290 since the third week in october. now let's look at the foreign exchange market. we all know the japanese and the americans, a lot of country nous develop nations, share something that is the printing press but it's really playing out in foreign exchange. put up this chart going back a couple of marches to 2011 and what you will see is we are right now, the dollar the highest level against the yen since march. whether it is the euro yen or the dollar yen, pay close attention. melissa lee, back to you. >> thank you, rick santelli. solarcity debuting on the nasdaq, hasn't opened for shares quite yet, scty. price ready at $8 last night,
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fresh off ring the opening bell at the nasdaq, elon mucks, the chairman of solar city lyndon rives is ceo and co-founder of the company. guys, great to see you. >> thank you for having us. >> lynn done, i will start it off with you this is a reduced offering, can you characterize what happened behind the scenes? did you see less demand for this offering and why the need to push this thing out of the gate right now? >> so, the fact that solarcity come out is quite amazing, it is best that we have a good product. we provide cheaper, cleaner energy. the solar sector has taken a beating and unfortunately, we have see received some of that but it is not based on today. it is based on what is the long term. and by us offering cheaper, cheaper electricity, you will see that fundamentally, that will change. >> all right. let's talk about long term then, because in your filing, you said that long-term growth is heavily dependent on government subdid sid disand clean energy policies and note the u.s. federal tax
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credit for solar projects with will fall 30% the cost of the system to 10% tend of 2016. >> i can't hear a word you're saying, i'm sorry. >> lyndon, have you got me now? >> i can't hear you. >> elon, can you hear me? >> i can. >> you can? all right, elon, i will direct the question to you then. just talking about the notions of federal subsidies and tax buoying, you know the in your filing, the tax credit will fall from 23 3 0% to 10% tend of 2016. what happens to the company and its profitability when the tax credits fall by that? i'm asking this because we are in a time of potentially american austerity when there will be federal cutbacks across the board on lots of things. what happens when subsidies go away? >> absolutely. well, essentially what we need to do is improve the cost structure of the business by a little over 5% per year between now and then in order to
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maintain a good cash flow stream and ultimately, remain profitable in that timeframe. so we were actually quite confident we can do that and the subsidies will -- the short-term subsidies will serve the effect their intent had, to be a catalyst for the advent of some l -- solar power but think the business can survive without any subsidies at all or perhaps subsidies no greater than those already provided to oil and gas. >> let me switch topics for a moment, because you are here, you can hear. the short hills mall wasn't recently, went to your show room for tesla, buying a suit, almost bought a car. a very long way to buy one, guy on twitter and find you and looks like cash flow positive for burn week. is that one week an aberrations given the fact that i know people are putting down payments, trying to get the cars but the cars are unavailable? >> um, yeah, well, this really isn't about tesla. it is about solarcity.
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>> i just turn it had into a thing about tesla. i apologize. opportunity to speak to you, not going to pass up. >> yeah, i feel really good about the future of solarcity and tesla but today is about solarcity. >> well, indeed. i just again, i'm trying to get a read on a company that people have a stock that's been bought and bought and bought and just trying to get a sense this is as you up -- are you upbeat about the profit forecast for tesla as you are for solarcity, to bring it full circle? >> i am. absolutely. i think both companies will ultimately be quite profitable, at least in line with other publicly trade companies. so, you know, our goal is to -- with both companies it is -- our aspiration is to make a reasonable profit while growing the business as rapidly as we can. i fool confident achieving those objectives. >> can you hear us now? >> i can hear you now. >> we will try to ask some
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questions and see if we can get th them answered. why did you cut the price so significantly for this ipo? >> it is important that solarcity goes public. important understanding the company, learning the company and seeing our growth h 100% growth year on year for the last three years and for the entire sector, specifically the solar sector, we need to see a fundamental change and the change is from selling equipment to selling energy. we sell energy that is cheaper and cheaper than you can buy from the utility. so, that change needs to occur. that will take time but we will show that we can make that happen. >> but lyndon if you are so confident about the company's prospects, why would you push that out now, to david's point? just taken a ad out in "usa today" and distribute pamphlets to get the message across wait for the company to be stronger footing and go out at the price you wanted to go out at? >> yeah, actually, i can maybe add something to that which is --
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>> sure. >> -- we did debate this quite vigorously, should we stay private, some additional private funding or go public and it was an item of really intense debates among the board. and there were times when we thought, okay, we should stay private, times we thought we should go public. ultimately decided in favor of going public. the were for that i actually called some of the institutional investors that i respect the most, like fidelity in particular, in and asked them what do you guys think? should we go public now or should we postpone? their response is they felt we should go public now and give the public marketance opportunity the next several quarters to follow and evaluate the company, monitor its performance, really understand the business model and that would be the best things for the
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company. so, we responded to the feedback that we got from the institutional investors that we respect the most. >> say something you will be monitoring is something melissa asked earlier, for either one of you. the ability to continue to cut costs, particularly in the face of what maybe declining subsidies for your product. how -- why is it you are so confident you can do that happened have you been doing that the last few years? >> declined fast at a much larger rate than what we need to decline past. there's two types of incentives out there, state-based incentives and the federal incentive. the state-based inseine strive declined significantly and in fact, we expect most state-based incentives to be gone over the next two years k the wellfields incentive is going to change from a 30% tax credit to a 10% tax cred commit 2017 f we can decline our cost buys 5 1/2% for the next four years, we will be able to achieve similar profits
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to what we are planning to achieve now. >> i think what may concern investors at this point, guys, is that we are at a time when we are talking about cutting everything across the board. the fiscal cliff. elon, to your response, said talking to your shareholders, like fidelity you et cetera, you know, what it is time to go out now, those subsidies might not be there down the road? what happens if let's just say, let's just say in february there are no subsidies for solar? what happens to your company? >> well, i think if there are no subsidies, hypothetically, i think it is extremely unlikely, but this a hypothetical scenario -- >> what is your worst case scenario, thinking about your business what is the worst case scenario under this fiscal cliff cloud we are living under now? >> i'm not worried about the fiscal cliff. i mean, i -- whether we go off the fiscal cliff or don't go off the fiscal cliff, i think
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there's way too much non-sense about this. this is not a cliff. >> non-sense? did you say non-sense? >> i could say that you're ikaros, is that non-sense? a mythological figure. let's deal with reality. >> i think we need to cut government spending and increase taxes. this isn't a cliff, we need reduce spending and increase taxes, end of story. why is that a cliff? >> we need more guys like you, elon, really, i think. you are a great entrepreneur and
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>> curious why you tweeted that concerned you would be served with a wells notice in the s.e.c.? we saw that with reed hastings and his posting on facebook? >> i don't know i think it is hard to say that if there's -- if you have a couple hundred thousand followers on twitter or something on that order, including the press, after hours, and follow up with investors, you do multiple channels, which we did, people aren't aware of that i don't think there's any sort of collective distribution of information. that would be an inaccurate characterization. >> and one last question, the target for tesla was to hit 400 cars per week in december. we are in december. have you hit that target? >> as much as i would like to
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disclose that, i -- >> this is fair disclosure, elon. >> i love tesla. >> green hornets, love ya. >> appreciate it. lyndon rive and elon musk. >> it is okay to be tough. it is okay. >> got to be tough. these are the questions everybody is asking. >> government subsidies, how much of their business, and thank you for asking that, because the people at home are thinking, hey, doesn't matter. whoa. fiscal cliff, no >> cty not fonder trade yet. we will bring that you first trades trade as soon as we get it. can i help you?
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welcome back. we are not solar powered here. we are just, you know, full of all sorts of energy from all sorts of different sources. >> indeed it. >> time for six in 66 stocks, 60 sends, don't have charts, doesn't matter we don't need them either. >> don't need no charts. >> too much natural gas in the country, when you drill it, wow, can't do that well. there is a chart. >> look at that. >> natural gas, consistent, have so much of. >> vra, vera bradley, who told buy, hold from buy. >> stocks coming in this is a fashion play, if you miss fashion, people don't like it, goes down. neighbor is the bounce people are looking for. >> brinker international? >> a lot of shuffle hog what restaurant is doing well. i happen to like this company but i think that panera is the one held up the best. >> knew buy at city. m and t bank, regional bank. >> we heard it from people about how the regional banks aren't
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making extra, bob pisani, people want ideas. m and t -- >> already a really good year. >> did this hudson city bank, david. fed let that happen. >> goldman a buy on yum. >> yes, this is a very big trade. goldman, everyone spectacle. novack turns yum. i think that this is the cheapest restaurant play. not panera, which is not the cheapest but the most momentum. >> tesoro. >> boy you know, if you are in the retyping business, david, you are really coining money. we got cheap energy here, you refine it charge the higher price. the margins terrific fors at the sore role we have to harness our cheap energy and get manufacturing here t can be done. the cheap energy and consistent energy in our country is remarkable. it is why -- >> stock's up 85% this year. >> they are coining money, david, i know you can say they are late with that but you get these major industrial companies taking advantage of lower energy costs in this country. it is a win for the american people.
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i'm try to be upbeat in the face of washington pulling us down every single day. >> upbeat tonight on "mad money," 6 and 11? >> brigs and stratton, machinery company. i got to tell you, i use a briggs and stratton energy to be able to power my house during the power outage. see you back here to >> all right, buddy. >> 6.5, the magic number, how let fed says the rate of unemployment has to get to before it even thinks about raising rates. what if we don't get there? we will explore what's at stake for your money. keep it here. how they'll live tomorrow. for more than 116 years, ameriprise financial has worked for their clients' futures. helping millions of americans retire on their terms. when they want. where they want. doing what they want. ameriprise. the strength of a leader in retirement planning. the heart of 10,000 advisors working with you one-to-one.
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this is the only thing we've ever wanted to do and ink helps us do it. make your mark with ink from chase. welcome back to "squawk on the street." we have october. inventories hitting the wire in a few sends. already a sizable amount of data. and here we go, up .4 of 1% on business inveriors to that pretty much was at the encenter of the target, exactly what most analyst, economists and traders were looking for. i don't suspect this number is going to change anybody's trading strategy for today.
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take a check where we stand, a half hour into trading now august flat line across the markets. the dow is now up by about two points here. the s and p adding a quarter of a point to the nasdaq, up -- down, excuse me, by 1.5 points, waved down by shares of am down 1.5%. let's get to the road map for the next hour, the federal reserve says low interest rates are here to stay. what's it all mean for your money? a top money manager is there. iphone 5 users, google maps is available on apple's new operating system. we will show you the pictures. the last facebook lockup exploration of the year is tomorrow. the federal reserve saying
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it will keep interest rates low until unemployment hits 6.5%, low rates locked in for the long term what does that mean for your port foal zoe the vice chairman and director of research with aerial investment is here with us. charlie, good to see you. >> good to see you. >> this seems like this is a message for investors, you got to be in riskier assets in stocks, maybe hard assets as well. >> that is exactly what the fed is trying to do trying to push people into riskier assets, as you just said, think we have all known that for a long time, the question, do they have much power left to do that? good point, we are coming up on the four-year anniversary of zero interest rate policy, charlie. 12/16/08 the date, reaching the four-year here, the 16th. the nasdaq in that time period up by almost 90%, the s & p up by almost 56%. do you think that this will actually continue to work or is it time to look elsewhere? >> it has worked. and you don't want to fight the
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fed. so this would be terrible time to take your money out of stocks and put it into bonds because the fed is prong up the price of bonds would be in my opinion, long-term foolish to lock in money with a ten-year refresh rate 1.7%, just silly when you have lots of very high-quality stocks paying dividends higher than that and those dividends are going to grow. this is not a time to fight the fed. stocks are more attractive than bonds, on a historical basis you significantly more attractive than bonds. charlie you what is the bigger picture here, many people who believe that we are not going to get the mass manufacture merring back into the united states that we had in the '60s, '70s, '80s that is gone. if the demand picks up, you can create more jobs in the american company but it is going to be very difficult to substantially bring down unemployment. therefore, my question to you, if you believe that or against that context, whether the fed is
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intent on debase the dollar longer term and what the implication. are we basically stuck in qe for a very long time and 30% down on the dollar to occur the likes of bmw and daimler, what are the implications? >> a lot of great questions there a couple things i say, we think more jobs can come back, two reasons. never underestimate the importance of housing to the job market, going to get more housing starts next year, state levels way below household formation, when we get an extra 100,000 new starts we get almost a half percent drop in the unemployment ray. secondly, the energy picture is going to change. you and i have grown up in a time when energy has been -- we have been importing energy into the u.s. the u.s. is going to start being a major exporter of energy. going to take time but end adding those jobs, cheap natural gas will bring jobs back to the
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u.s. we are long term volek. your last question about the fed and how long it will be, when we start getting unemployment down to 6 1/2 we think could happen in two years, you will start see interest rates grow up. >> just on the subject of the housing rebound which clearly a lot of people's expectation for 2013, continuation there, goldman sachs, suggesting overnight the banks are the way to play that, the big american banks. would you agree? >> i have been on your show before and talked about financials, we think financials are very cheap because of this factor that when we get more growth in housing, we are going to get more employment, going to get default rates continuing to tick down, credit card defaults, mortgage securities are going to trade better we do think banks across the country will benefit from that even my favorite, the investment bank, morgan stanley
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and goldman sacks will benefit from that. >> a deadline in january which 19 banks will submit to regulators that their plans for buy backs and dividends which do you think will file a plan for a shared buy back or dividend? >> morgan stanley, always talk about morgan stanley, the big swing factor, a lot of people think that jp morgan is going to get approval, probably already in the plans. i think even citi is going to get some approval. morgan stan slit swing. apply for stock repurchase, the stock trading at 60% of tangible book value. any stock repurchase for morgan stanley would be positive for that stock. >> charlie, good to see you. fed chairman ben bernanke celebrating his 59th birthday that morning, happy birthday. brings us squawk on the tweet. what do you think bernanke will be wishing for when he blows out his birthday candle s?
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turn you can to technology, the addition of the google maps app this morning launched it to number one immediate lakers few hours after its release. apple previously, of course, replaced google-powered maps app with its own version, you know the criticism that ensued there. on the cnbc news line now is the editor-in-chief of mashable. have you experienced the new app? >> yes, yeah. i have downloaded it i downloaded t pretty much [ inaudible ] not the same google maps you remember, cleaner, but has all the good features, especially transit, something everyone missed. >> explain that point, if you would. >> so when apple came out with its own maps they basically came out with a product that had less functionality and less accurate than the product deet fault, which was google maps and one of the things they left out
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[ inaudible ]. important to remember thank google maps is not the default on ios 6 or iphone 5, have to download it have to choose to use it. >> you look at the stock's reaction and imply that this is a big deal for google, the stock up more than 1% while apple is lower. doesn't this underscore the i shall through am made a huge mistake with the app match in terms of turning it on live when it wasn't ready to go and put the fresh slur on a until terms of getting everything else right? >> yeah, well it is a rare misstep for the company. obviously, people lost their jobs and stuff. seth forestall no long we are the company, the guy driving that project. among other projects it is very rare for a toll deliver
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something that isn't seemingly perfect, certainly has 99% of it right. there were glaring errors on the am side and am maps just major monument, misdirection, mislabeling. really, apple left google an opportunity to show them,is done. >> you know, lance, i understand the huge commercial value potentially of the mapping service and i think steve jobs himself identified mapping as one of the keys to the future of computing. in this new new app i read 80 million business and as dresses, and will attempt too cross sell the local businesses. isn't there a point which you say this may not be core coo toll am, a hardware producer, yes, needs to create an ecosystem but not necessarily internet application ander is much internet applications, which are google's business?
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>> you answered your own question much. the importance of localization and connecting that to local commerce, that can't be understated. this is what people do. they have their phones, they use the maps to find things they want to do, they want to buy. how could apple step away from that? that is why they put yelp deeply inside of apple maps but they just -- get it right now, you know that apple has been updating their maps programs, they will continue to do so. the fight is absolutely not over. >> lance, good to talk to you, lance ulanoff, editor-in-chief of mashable as the new maps app becomes available. 149 million facebook shares will hit the market tomorrow for the last lockout expiration of the year. how should you had play the stock before the lockup? if you think there is disfunction in washington? check out this video from the ukrainian parliament. we will tell you what they are fighting about.
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corporate leaders firing another warning over the fiscal cliff. kenneth frasier staying new price controls on drugs are put into place as part of budget negotiations it could hamper innovation in the pharmaceutical industry, making it more difficult for companies to created me since. frasier tell egg the financial times, the short-term fiscal pressure that the u.s. those
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contend with people go about fixing it the wrong way could really damage innovation. >> now just 18 days until that series of automatic tax hikes and spending cuts could accept u.s. economy over the fiscal cliff n about an hour's time, house speaker bain letter tell us exactly where the republican party now stands. a new "wall street journal"/nbc poll shows what the public thinks. john har wood is in washington, d.c. with the details on that welcome to the program, john. i would expect that two-thirds of americans might say, the cnbc slogan goes, rice above what is interesting here, the majority of you republicans, 59% say do a deal and 61% of republicans say it is okay to raise tax on those earning more than $250,000. >> well, exactly. what we have seen is that the public has absorbed the idea that the fiscal cliff and going over it would be a very bad thing to do they are looking at what the least bad alternatives
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r if you look at the "wall street journal" poll, you can see that president obama has the upper harden this in defining what those alternatives -- least bad altern trip. first of all, yet of who do you trust, 38% say they trust president obama to handle the fiscal cliff. that's twice as many as, say, speaker boehner. 14% say both equally. 28% say they don't trust either one of them. then when you look at the specific solutions, you can see that president obama again has the strong hand. when we asked people does the president have a mandate, 68% say yes, he has a mandate to cut taxes for people under $250,000 income, 65% say he has a mandate to raise tax on the wealthy while cutting spending and 59% say he has a mandate to end those bush era tax cuts on incomes over $250,000 so, melissa, that is a sign that the president has the advantage in public opinion and why he is pressing it, both on the road
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and today at the white house, he is doing interviews with local television anchors to try to put the heat an those republican members of congress to come along with him, also john boehner's problem. john boehner has to get his troops follow him, melissa. >> let me pick it up if i may, john. it seems to me that boehner is increasingly des sfroot try to get something out of the white house. if you look what the we now learn on the tuesday night conversation, they were emphasizing how far apart they were. and the reality is that obama has a very, very strong hand here, doesn't he, because if we go over the fiscal cliff and all taxes go up, he just on day one of congress comes back to them and says, okay, i now want to pass legislation to cut taxes for those earning less than 250,000. what are the republicans going to do not pass a tax cut? it seems to me that he has got all the cards here. >> well, more and more republicans are coming to that conclusion, simon. we saw even yesterday, john cornyn, very conservative senator of texas, chaired the
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senate campaign committee said at the end of the day, we are going to have to extend these tax cuts for people under $250,000 bob corker said the same thing, tom cole in the house said the same thing h the question's going to be how do you get members of the house republican caucus to vote that way? many of them are from very conservative districts, they don't accept the logic or the reasoning, it is not an easy thing politically or culturally for them to go along and that is john boehner's challenge. >> thanks, john, see you later, john harwood live there from washington. if you think our nation's cap stall dramatic, take a look at this video. lawmakers from the ukraine's ruling party and the opposition literally fought each other on the floor of the country's parliament yesterday. the lawmakers are coming to blows over the election of parliamentary officials. ukraine's ruling party only has a very slim majority of seat he is. lawmakers tried vote yesterday but the voting had to be halted because of the fighting. >> oh, wow. get back to the markets, vcs care mark out with positive guidance this morning. kayla has that.
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>> cvs caremark saying that earnings will grow in 2013 a higher rate than they actually grew this year, above wall street analyst expectation. the company boosting its dividend today that's good news you can sending the shares up 3% to an all-time height $49.02 right now. simon? >> thank you very much, kayla. ahead in the program, a very exciting prospect for 2013. we will outline which companies are most likely to make big wall street debuts, coming up, "the wall street journal's" dennis berman will look at the ipos for next year, could be twitter, could be hilton hotels. shares of best buy are surging today on a report that best buy's founder, richard schultz is going to make an offer to take the company private by the end of the week. we have the report here broke that story, coming up.
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this isn't that kind of deal. [ male announcer ] break from the holiday stress. ound shipping at fedex office. on the run in belize, then guatemala and now he has landed in miami. john mcafee you the former pc security titan caught up in a murder investigation. he is now back in the united states. robert frank joins us with the latest on this saga.
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robert? >> yeah well, the mcafee circus, as we call it, came from miami. arrived last night after being deported from guatemala, met on the plane by marshals not there to arrest him but take him safely to his taxi. mcafee is on the run, of course, after the murder of his neighbor in belize. he is wanted for questioning in that killing. he denies being involved in the murder. he says police want to kill him for not being paid bribes, he has no money, no home and no plans, perfect for being in miami. he is going to chill out there for a while. he says a mysterious canadian dropped off a wad of $5, his only money now. his $20 million fortune is in belize banks, he doesn't have access is to it the critical fact here is that he is not a wanted man. he is only a person of interest. and i say this because the belize police just told me that the case is still open. they are investigating. they say if he is charged, the u.s., under a treaty, would have to send him back to belize. for now, he is safe. but melissa, this story changes
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every hour. so, who knows what the story will be this afternoon. but for now, he is safe here. he will not be extradited because he is not a wanted man. he is enjoying miami beach. >> why doesn't he have access to his money, just because there -- it's physically in belize? there's such a thing as wire transfers and atm machines these days? >> told us on air, for some reason, he cannot access his own bank accounts in belize. he said he is trying to figure out why that is the case. he couldn't get electronic access to his own accounts. they play is frozen those accounts. but he says he has $20 million that he cannot get right now. >> all right. it's gonna take him not a long time to run through a wad of $5 bills. >> miami beach. >> eating sushi on ocean drive. yes. >> any sense over what's doing now or where he is physically? >> a lot of interviews? what he is going to be doing? >> for money? >> maybe start charging. yeah. >> the important thing is he has sold the movie rights to his life so now the big question is who is going to play him in the
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movie? i thought robert downey jr. would be good, if you aged him a little bit, other candidates welcomed. right now, he says his focus is to get his two girl friends from belize or i guess in guatemala now to the u.s. that is his big focus now you getting his two girl friends up to miami. there is an irony a man not so keen on america runs back this way. >> exactly. he told us on the air he would not go back to america. we said, john, why not come back to america? still an american citizen why not come back? he said belize is my home. of course, then he went to guatemala, now back here. we don't know what to believe from this guy p's prankster, told us different things along the way. this does feel a lot like a media circus now but it is fun to watch. >> a lot of homes in the u.s. >> he did. now apparently none. >> sold them for a fraction of what he paid. >> only a wad of 5 bills. this story has come -- charlie sheen might be good. >> he would be. in many ways. >> temperament.
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robert, always good sigh. thanks for coming down. the euro has had a very strong run, as you will be aware, up about 3% the last month. the eu finance ministers' plan to give money to greece, will the rally continue? todd gordon is with us aspen trading you. morning to you, todd. >> hey, simon. >> we have failed twice to get through 1.31 on the euro. where do we go from here? >> the fourth time we tried? the euro support and european finance ministers rather busy, appoint the ecb to head up a eu banking regulation which unfortunately you won't take effect until march 2014. the meantime we need to rely on esm for support. the other side, german finance minister wrote off the lower bank, congress that they approve a greek aid bailout. looks to be euro fairly support. >> interesting you argue that. in is the point here that the
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fed is accelerating on debasing you the dollars, that is why the euro rises? >> really interesting. that was the trade yesterday. the take away from the fed's statement. we reached a new high in qe 4, 85 billion a month, purchased and treasuries and mds that put the dollar to heel. overnight, reaction to the fed, overnight you can the dollar stayed very offered and i think despite lower gold and treasuries you can the dollar is trading very weak. so looks to me that that 131 level really wants to go, we need to be long for that move. >> got some levels for us? >> what you want to do is be long 131 call 13075, 12075, 100 points lower, a short-term trade, i don't think this dollar weak as soon as here to stay, get out 132 >>. >> have a good weekend. thank you very much. for more currency trades, be sure to catch "money in motion" currency trading, fridays, tomorrow, 5:30 eastern. want more education about currencies go to currency can class at "money in motion."
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breaking news on natural gas inventories in just a few moment he is. will the results put an to end this week's slide? the fourth faye facebook lockup expiration is away. how should you had play the soci -- how should you play it?
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new york mercantile exchange is bracing for the release of natural gas data. get down to sharon epperson and see exactly where we stand. good morning, sharon. >> good morning, simon. natural gas futures right now selling off once again p the selloff has continued for the better part of a week now and we are looking at natural gas prices that are right near a key technical level, around $3.35 per million btus. this is a very technical support level and a low here and the low here this morning could send prices down to 3.25. so, maybe even the $3 level some traders are saying. right now the energy department is saying there was an increase in 2 billion cubic feet in terms of natural gas in storage in the past week. now, this is very bearish compared to what we have seen in the past year and the five-year average, where we have seen as much of a trim digit triple di
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in storage levels. we have seen warmer-than-normal temperatures and is expected to continue the next six to ten days, another factor pressuring price bs but in terms of what w are seeing here, 2 billion cubic feet, is still in the range that we saw from analyst expectations, although the consensus was more for a decline of one to five. again this is bearish news for the natural gas market and we are looking at natural gas prices extending the selloff right now. >> still below $87 on oil. sharon, thank you. >> sure. shares of facebook up more than 40% the last two months. tomorrow, more shares set is to unlock. should you like facebook ahead of the second biggest lockup expiration? victor anthony alto peek ka capital markets. he now has a $36 price target. brian weerz, senior research analyst at pivotal research group has a buy on facebook and $350 price. but did he have a sell on it when he initiated to have coverage following the ipo. great to see you again. brian, i will start off with you
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in terms of lockup impact is there one anymore? have we gotten past that? >> i think we have gotten past that. the stock handled a couple million shares some days, going up those days. even if everyone sold, which suspect going to happen, it wouldn't be an issue. >> victor is it you are surprising to you in terms of the stock's run in a short period of time, what is the primary catalyst for that? >> i wasn't surprised, i was surprised by the lack of expe ex-expiration, it was priced into the stock. >> the mobilization, mobile 14%, advertising revenues, the third quarter, that came far ahead of my expectations, far ahead of the bearish ex-smekations as well. that was a key for the stock's move, the lockups past us, several different catalysts in 2013, instagram, addition to the
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s & p 500, launch of engine, a lot of bright things ahead for facebook, should be wearing shades. >> $36 is the price target. you believe it could climb by 30% from where we are now, victor? i enjoyed your note, of the four reasons you are bullish, pick out the launch of a social search engine which you believe could generate $2.5 billion in profits, what -- what does that -- what is a social search engine? forgive me for being so naive? search engine that's based on -- because the fact the content is supplied by the users, that is differentiated from what you see coming out of google, google uses a brute force index, go out and index websites and i think facebook will be able to do it differently because the condition tent has been is up blight users that is the social aspect of it. >> this is yes find it so interesting. yesterday, facebook took steps
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to simplify its privacy settings, you get more control, i'm told, and clarity over what personal information could be used, however, it's removed one privacy ones that will effectively make it more difficult for users to stay hidden. so, you don't have the option to hide yourself on the main search tool anymore. which points to exactly what you're saying, ensuring that people are available to be included or sought after through this search engine. >> yeah. yeah. definitely. you know, i think that what you just noted may rang al few users, over all, i think is beneficial for the user experience overall, longer term. i think they will use that as part of the whole search engine rollout. >> seems an unlikely thing at this point. they haven't staffed up any meaningful way to move forward on that a possibility, but i think the nearer term focus needs to be on fbx, this exchange buying realtime bidding
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for right real advertising and on an ad network, a much bigger deal i think in the near term that will drive acceleration next year. >> yet far less optimistic, $30 where you are calling you the stock? >> low $30 range, where been from frankly february is where been on underlying value of the company. >> all right, guys, we are going to leave it there thank you for your time. brian weiser, victor anthony. let's send it to kayla tausche for a market flash. >> we are watching shares of philips 66, psx. now, this company was spun out of conoco phillips just about a year ago but today, it's down big, down better than 2% on news it is spinning off the bulk of it's a sets into a master limited partnership, expected to be a high-yielding asset but investors bearish on philips 66 because a lot of the highest assets will be spun out of psx. >> thank you very much, kayla tausche. luxury retailers may be
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we are being held up dramatically by the lack of decisionmaking and what we are finding is that the uncertainty of the fiscal cliff is keeping people from making decisions. we have seen this weakness actually hit our order flow. we are going to be forced with more of a slow down and even the folks for layoffs. doing nothing is not an option. help us get strong again right here in america. one industry that might not be feeling the effects of the cliff, retail. are holiday shoppers ignoring the fiscal cliff? jane wells is live in canoga park, california with more on that. jane? >> melissa --
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>> that sweat, jane, that's awesome. >> thank you so much. >> is she pregnant? >> even the doors with the westfield mall here in a few hours, i will explain why i'm wearing this hideous sweat shortly. but the fact is sales are up here so far this year the male saying -- the mall did see a lull after the holiday. piper jaffray says sales run 1.5% from last year around expects the trends to speed one 40% of them still ahead of us a couple trends we are seeing bear out, the consumer federation says more people plan to spend more this year and there has been a huge jump in using cash over credit. listen. >> spending more or less than last year? >> um, probably just a little bit more. i think that things have gotten just a little bit better. >> the economy, i think, is just a tad bit better this year, think so i think more people are out shopping this year than last year. >> actually, i'm spending more this year. >> cash or credit?
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>> this year it is all cash. >> actually, i'm using more cash as opposed to credit. >> cash, definitely. we have learned the hard way with the credit so we are trying to avoid that as much as we can. >> america's research group believes walmart is the winner this season but goldman sachs is liking specialty retail stores you at the at the mall. yes, the gap, even though it has already had a heck of a run this year, basically, everyone here i asked knew what the fiscal cliff is, but they are not particularly worried about t meantime, are you worried about this sweater? i'm wearing it for the ugly sweat campaign by stand up to cancer. you raise money. people pledge. if you have the guts to go out and wear this in public today, i've already gotten some stares. for more information, go to ugly sweat.su 2 c.org, go the find your favorite sweater, you will see my name. >> can you turn and model? >> well it is not asing youly on the back. >> oh, yeah. >> 'cause it is plain.
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>> like a maternity shirt. >> i was going to say are you with child for christmas? >> with santa. >> the good thing is i can eat anything i you want today and you won't know. melissa, i have a second sweat, which may be uglier and you're going to see it on "fast money." >> i find that hard to believe but certainly worth tuning in for, jane. >> always surprise. jane wells on the west coast. okay. let's focus on the outlet mall situation and head over to courtney reagan, who is -- where are you, courtney? >> ha ha, i am in bergen county, i'm just down the road, simon, from where cnbc headquarters is we are at the outlets here, luxury has been kind of a mixed picture recently, as the wealthy start to worry about those looming fiscal cliff tax increases. however, outlet malls have actually performed better. consumers are finding value in the off-price luxuries at outlet malls, like this one. >> the consumer has begun to make some significant statement
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us in terms of their rpreferenc and the outlet malls are starting to find some distance between their performance and the performance other traditional malls. >> outlet mall occupancy nearly 95%, according to capri partners, compares to traditional malls about 90% or so th so. then when you talk about the revenues, 13 to 15% compared to low single digits for their traditional counterparts. we have the average base represent of 8 1/2% for outlet's and those sales up about 9%. l lum board says they are seeing the revenue increase and as a result, high-end retailers like nordstroms are looking to open more of their shops in the outlet centers. nordstrom plans to open 15 nordstrom racks in fiscal year 2012 and just one full-line
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store location. the outlet store strategy is baked in the cake going forward for these luxury retailers, finding it is a very successful growth strategy. >> shares of simon property group and general growth partners have outperformed the s & p retail index the last year and ken lum board of capri capital partners say investors noticing that and become more interested in those stocks for the first name two to three years. simon? >> are you going to be participating in the ugly sweat competition on air today, courtney? >> maybe she has it on under her coat, simon? >> you know, i would have, had i known, i really wish i would have gotten on board with jane to do that a great idea. >> i will look for appearances throughout the day. thank you very much, courtney reagan there, setting the power of the outlets. speaker of the house john boehner set to make remarks on
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the latest developments, if there are any, in the fiscal cliff negotiations, we will bring that to you live in exactly half an hour, 11:15 eastern. first, rick san telly is working on his next slot. what are we looking forward to, rick? >> the pledge over allegiance, simon, a line in there a "and to the republic for which it sta s stands" and not to the democracy for which it stands, not to the absolute monarchy for which it stands, not to the constitutional monarchy for which it stands, not to the dictatorship which it stands, we will talk exactly about some of the differences in various forms of government that might be applicable to the fiscal cliff. come back in a couple of minutes.
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welcome back to "squawk on the street," i'm kayla tausche at the market flash. take a look at shares of the harbinger group you can the parent company for harbinger capital. you can see the shares down sharply, about 26% in early trading today. the reason is that a certain shareholders of harbinger capital, which is the hedge fund, are selling their shares, about 19%, down in premarket. you can see it is down further. the big question is why are lead investors in this hedge fund selling their shares?
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it is not going to be the proceeds going to the hedge fund. it will be existing investors in that hedge fund. so, that's big story and one that we will keep our eye on, david? >> thanks very much, kayla tausche. did want to direct our viewers as well to shares of best buy this morning, up very sharply on that "minneapolis star tribune" story we told you about today, saying that its founder, richard schulz, will make a fully financed offer for that company by the bid deadline, which is december 16th. what i can tell you, it is a somewhat complex story, as you might expect, i think we are going to be speaking with a reporter behind that story later on. but for now, keep in mind a few things, there is that deadline. if, in fact, they do make a big bid and it gets rejected, he has a right to come back with mot r another bid. i'm hearing there is conversation could you get a one-bid deadline some time in january, giving the schulz group or potential group the
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opportunity to look at christmas sales? that will be the key here. we will see. do you get a place holder bid of some kind at a very low number, intended almost to be rejected to give that you opportunity to come back in january or the board of best buy say, you know what you want to try to make a bid, we will give you january, you can see how christmas is, see if you can get something together? we will see what happens there. but those are some of the key considerations. one other one, of course, is the price has come down so sharply over time, as you see, the actual bid itself and the components of it, debt and equity, they have to be might n deal to get it done if, in fact, you could get any of the private equity firms to really put the money up. so we'll see. interesting situation as we head into this weekend. we'll give you more as we get it. back to you. all right. actually, it's back to me. let's get to the cme group and rick santelli. rick. >> reporter: hey, thank you, guys. once again, to the republic for which it stands. you know, this country is a republic. and i'll tell you, there's a lot of various forms of government,
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but this really is important. a republic and a democracy are pretty much identical, pretty much on every level. except for one. and this is where i think the fiscal cliff and simon referring that, you know, president holds all the cards. i don't know that that flies. the difference is, in a republic, the sovereignty rests with every individual person. with a democracy, it rests with a group. and this is a big distinction. because we elect leaders to represent us. so when they go to washington, they are there for a reason. the president doesn't hold all the cards. the cards are evenly split up! now, we had senator mark warner on the other morning. and i would like you to listen to a clip of the senator. please roll our clip. >> this idea that we're going to lurch now, that it's become not accepted modus operandi that we're going to go 12 to 15 months over a debt ceiling debacle no matter who was elect.
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i would have been for getting rid of this kind of debt ceiling poker that we play. >> reporter: oh, my goodness! what does he think, it's a monarchy, a dictatorship? you know, various forms of government are very inefficient. these are very inefficient. we are a republic, very inefficient. if you want a really efficient form of government, you have a king or a dictator. and in the end, you hope it's a benevolent one. but then you could get things done. there's no lurching. there's no bumps. that's the cornerstone of checks and balances. now, another thing happened yesterday. we had fed's bernanke talking about exit strategy. and i found it kind of ironic that on a day where he basically introduced a new treasury buyback program to the tune of $40 billion a month without any selling and any sterilization, the topic became the exit. we're kind of hearing the exit -- this white board isn't big enough. follow me. follow me.
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hurry up. hurry up. hurry up. you know, i think that talking about an exit or two years ago talking about practicing max sales is putting the cart definitely in front of the horse because i really think that we are here and the exit is going to be here if there is a doorway at all. and i will tell you there isn't. you know what's going to force the fed to the exits? the markets will. you mark my words. back to you. >> that was exciting, rick. i didn't know where you were going for a sec. rick santelli, the one and only. >> i needed a bigger board. coming up next, a multimillion-dollar watch collection that's going up for sale. what legendary ceo owns it and why he is selling. and keep those tweets coming. fed chairman ben bernanke celebrating his 59th birthday today. what do you think bernanke will be wishing pore when he blows out his birthday candles? tweet us @squawkstreet. some of your answers straight ahead. to offering you
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of them in today's "million-dollar minute." ♪ >> want to know the true value of time? this is nearly $2 million worth of watches. and this collection could fetch up to $5 million. >> reporter: 50 vintage timepieces could fly out the doors at christie's. they were owned by the former ceo and chairman of continental airlines. >> i enjoyed them when i bought them 20 years ago. and right now the money is just sitting there, and i want to put the money to use. >> reporter: proceeds from some of the top lots will go to charity. >> two are being sold for the united foundation. and three are being sold for the navy/marine foundation. >> reporter: tell us about your favorite watch. >> that's the problem. they're all your favorites. you can't talk about your children that way. the star dial that's in the collection, it's impossible to find. >> reporter: and this rolex is expected to go for over $300,000. >> the top lot is a paddock fleet 1518. and the other is $600,000 to
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$900,000. >> wow! robert frank is with us here. >> a million-dollar watch, almost. amazing. >> i would just be afraid to wear that on my wrist. in fact, the reason he's selling these is because their values have risen so much in this collectibles boom that we're having that he said they were all just being kept at a safe-deposit box. he wasn't wearing them anymore. so why not put the money to use? he is giving part of this money to charity. >> is there any premium associated with this collection because it was owned by gordon bethune? >> he was a great collector. and he gave us three rules for being a smart collector. one is just buy the top brands. so rolex, cartier, paddock philippe. don't ever buy a new watch. you'll lose half the value right away. and he said get advice. he said knowledge is a replacement for money. >> hold on a minute, how can he give that advice? make sure you buy -- oh, they are second time. i was going to say, is he say don't buy my watches, they'll lose value? >> and get advice.
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there's so many frauds and fakes. even if you're buying a $1500 watch, you don't have to have a huge amount of money to be a good collector but get advice. >> how much is this group watches gone up in value? is there any way to mesher? >> there's no really good index. we have good indexes for wine and art but not watches. smoof these watches have more than doubled in value over the past ten years. we all know the wealthy want to put their money in hard assets they can touch and feel. the problem is they go up so high in value that you can't really use them anymore. he still has a lot of watches left. >> what he said at some point in there, he said i enjoyed them when i first bought them. like you had many on one wrist. >> probably. >> he just looked at them and stroked them? >> probably not. >> i enjoyed them when i first bought them. >> but he was telling us his system for figuring out, look, he still has a lot of watches. he's selling 50. so he had a lot of watches. he was telling us how to decide which ones to wear, very complicated set of decisions just picking out which watch to wear.
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a nice problem to have. >> you don't wear a watch at all. >> we have enough screens around us. you guys wear nice watches. >> i wear the same one every day. i've become accustomed to it. don't have to worry about its value. >> i know he's donating the proceeds to charity, but still if there's going to be a cap on the deductions, that could also impact charitable contributions. >> he said it wasn't. he said it was just a good time to get rid of this stuff. it's interesting, art is taxed at 28%. i don't know about watches, but a lot of electricitiby ib colle at 28%. that rate is changing. we haven't seen a cliff effect on collectibles. >> interesting. >> good to know. robert frank, always good to see you. thanks for stopping by. let's get to it. here's what you might be missing if you're just tuning in. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> the republicans have offered a deal that makes sense, that's reasonable, that says guess what you can do.
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you can get this done without raising marginal rate. >> the fed is going to be exceptionally easy for a long time. and it could be a couple years, it could be three, four years, maybe even longer because unemployment is now structurally higher. >> i think all he is doing is saying listen, i see what we're going to do, follow these countries that have fiscal responsibility, a lot of people will be fired. don't worry, i'm going to do my best. what are you going to do to keep people employed? really, an unreality about these stocks, they should not trade with the google maps is better than apple maps. google last time missed. apple's missed twice. maybe apple's doing better. >> it seems pretty damn obvious that we can't run trillion-dollar deficits continuously. so this isn't a cliff. we need to reduce spending and increase taxes. end of story. >> this stock is handled a couple hundred million shares
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some days and going up on those days, too. so 150 million shares, even if everyone sold, which isn't going to happen, it wouldn't be an issue. >> we're checking our lists as the "squawk on the street countdown to christmas" continues. ho ho ho. ♪ you better watch out ♪ you better not cry ♪ you better not pout ♪ i'll tell you why good morning, live here at post 9 at the new york exchange. how we're trading this thursday morning. pretty flat-lined on the markets after the fed announces no change to interest rates. 0% interest rate policy remains intact. and it looks like for a very long time. the dow is down eight points, the s&p down a half and the nasdaq composite is up by 5 despite apple being down by a full percentage point. we are watching shares of blackberry maker research in motion. shares hitting their highest intraday level since may. positive reports about the blackberry 10 up by 4.5%. here's our list for the next hour. yes, we've checked it twice. speaker of the house john
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boehner will give a statement on the fiscal cliff in about 10, 15 minutes. we'll bring you those comments live. plus, shares of best buy are getting a big boost today on a report the founder will take the company private by the end of the week or at least make an offer to. we've got the man who broke the story joining us live with all the details. facebook was obviously the big ipo of 2012. what will the big names be next year? twitter? hilton? dennis berman tells us what you should watt out for in 2013. first the fed announcing a new round of stimulus and policy changes but the markets don't seem to care much. steve liesman is here with more insight on all the fed's moves. steve. >> thanks. one thing i think we can say for sure, chairman bernanke has to be surprised at what's effectively been a hawkish reaction to the massive policy changes he put in place yesterday. those policy changes include an announcement that the fed would boost its monthly purchase of assets to $85 billion. that would be a trillion dollars in a year, and also link interest rates to unemployment. it became the first essential
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bank to link its funds rater overnight rate to the unemployment rate. these dovish moves have received a hawkish response in the market. gold is down on about 20 bucks or so. the ten-year note is off here, but since yesterday, it's off about ten basis points. and the dow may be up right now, but essentially it's been down since yesterday at 12:30. it's unclear if the market doesn't understand the fed's new communication or if it simply sees the 6.5% unemployment rate as closer in time than the fed does. i want to share with you some of what the street heard from the policy statement and bernanke's press conference yesterday. pantheon saying the fed's balance sheet would be deployed at full speed. the fed has given itself the freedom to pick and choose which indicators it follows. when the unwind comes, it will be very messy. that's sort of a hawkish note. steven stanley at pierpont
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saying the fed would maintain a 0% funds rate and a $4 trillion balance sheet if the unemployment rate was within a percentage point and inflation was at or near target strikes me as insane. guidelines rather than commitments to alter policy. ubs takes that a step further, pointing out the unemployment threshold is a minimum condition for a hike in the fund's rate rather than as a catalyst. i think the market may see it as a minimum. i do want to show you one other chart here which is the fed and unemployment. notice the balance sheet decline there, or the balance sheet increase. that's the blue line. going up by a trillion estimated next year. and look at what the fed estimates for unemployment. very, very modest decline in unemployment. given that huge increase in the balance sheet. so simon, a lot to think about for investors right now in terms of trying to figure out how do you make any money on this thing, or how do you even understand what the fed is going to do? i think we'll need some further communication from the federal
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reserve in understanding what these moves mean. >> can we just put that chart up again? you offered it. you know the feds. you offer it. is there any actual evidence that what they're doing is having now a positive effect? i ask the question because you started by saying there was a hawkish response to what they've done. are you, in fact, saying that increasingly ben bernanke is isolated in the type of policy decisions that he's making, almost in a little world of their own at the fomc? >> that's an interesting question, simon. he's not certainly isolated from his other board members. he got all but one dissent yesterday. so that was -- you know, he's not isolated that way. i do think there may be a separate track going on, if this is what you're talking about, simon, where the fed has one sort of line of thinking that providing this unemployment rate was going to be taken by the markets one way. and i'm not sure that it really communicated this from the market or even took from the market whatever concerns were there about the calendar date
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and really solve them. i think it might have created some additional problems here. i'll be very interested to see what else is said next week to try to put this into context. but the idea that there is a lot of confusion out there, i think that was evident in some of the statements that i showed you. >> all right, steve, thank you very much for that. let's bring in joe from deutsche bank and indeed a cnbc contributor. how can the fed tell people that they should spend more and borrow more if it says we're going to keep interest rates at nothing until the end of 2015 because unemployment is not going to fall substantially until 2015? >> that's a very good question and i don't have a good answer for it. this has been a deleveraging process which lower rates have helped. but at the same time, low rates or the commitment to low rates has hurt the spirits of the business cycle. that's why the fed, in the september statement, said it was going to keep rates low in anticipation of stronger growth because they implicitly acknowledged they had been talking the economy down with these calendar dates. but look. if we look at the behavior of the unemployment rate, it's fallen about 2% in the last three years.
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that's actually what happens on average during the business cycle. the difference is potential growth is less. we haven't had the gdp we want, but unemployment's declined. we will be at 6.5 almost certainly borrowing a recession well above mid-'15. >> to the point that steve was making. >> right, exactly. exactly right. >> interesting. >> in terms of just the mechanics of this new unemployment rate target, you're sitting in your office and you're doing your forecasts. and we're at a point where it looks like we'll hit 6.5%. in your view, 6.5% as a threshold at which the fed can start thinking about raising interest rates, is it a one-time print? do you think the fed will want to see two months of 6.5%? i mean, how, in your mind, does that actually work? >> the fed gave itself a lot of wiggle room in terms of other things they're looking at. so unemployment is the key number. that's what markets will focus on. but it's other stuff, inflation expectations and on the markets in the surveys. their own forecasts for
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inflation. they didn't even tell us whether it's headline or core. they have a tremendous amount of leeway when the time comes to do what they want. >> at the same time, this transparency on the way down is going to hurt us on the way up because the whole point -- >> absolutely. >> i will tell you that interest rates will stay low forever. i'm going to really telegraph it. i'll nail it. whether you like it or not, the estimates will go up. people go, i thought interest rates were going to rise. >> the inflation impulse which comes maybe way down the line, the problem is the systemic financial risk of unwinding the balance sheet and the ease with which the fed says it can do it, i don't think it's going to be easy and there's going to be no political desire at that point to save any firms which inevitably will have systemic issues when those rates go up. even if the fed doesn't do it, you guys know the market will move in anticipation of it. and the transparency, this is the anti-greenspan where the market's going to move well ahead. >> is the bigger risk, in your view, joe, when we get to that point, that inflation will rise so quickly that the fed won't be
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able to do anything about it at that point? that if it actually waits, then it's a little bit too late? >> i think it will be too late in the sense that we'll have a secular lift in inflation, but i don't think it's going to be like 1970. i think the problem is going to be to simon's point, we've got this $4 trillion balance sheet at the time, rates are low, and you'll have to get rates a lot higher than where they were just to prevent the situation they don't want to have which is significantly higher inflation. >> we need to go to bertha coombs at the nasdaq. >> the nasdaq was investigating what they said looked like erroneous trades in the minute before the market opened. and it has determined on its own that it is canceling trades in several securities because of those erroneous trades including trades on goldman sachs at or below $106.28 a share. trades on sprint at or below $5.09 a share. traders saying this morning they saw a print of 152,000 shares of sprint that came in at $2.82.
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a number of trades also on western union, at&t and kroger also canceled below certain levels. but trades on ibm, lucadia, hess and salesforce.com will stand. back to you. >> all right, bertha, thanks for getting down to the bottom of that. got a lot of e-mails this morning about these trades. our thanks, of course, to joe. who joins us here on set from deutsche bank. speaker 69 house john boehner set . speaker of the house john boehner set to take the podium after this break. meantime, take a look at this ipo. it just opened for trade. it is higher now by 18%, priced at 8 which is much lower than its expected range but trading right now at $9.50. >> it was the expected rate, as we said, more on solar city and more from john boehner after the break. by not breaking down. consider the silverado 1500 --
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trading at $10.11. don't forget, it was priced at $8 late last night. the initial range was $13 to $15. along with that lower pricing, can the news that there would be insiders who would attempt to buy the stock and in a sense prop it up, and that may be what we're witnessing now. >> in fact, we look at the rest of the solar sector largely trading to the down side with the etf that tracks solar trading down by 2%. here you have a live picture of capitol hill. speaker boehner set to give a
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statement on the hill in just a moment. let's bring in chief washington correspondent john harwood. john, what can we expect from the speaker given that we just heard from him yesterday? >> reporter: just got a note from one of his aides saying he's going to hammer the need for spending cuts as part of a package to avert the fiscal cliff. republicans are on weak ground in this debate. president obama's more popular. the democrats are more popular than the republicans. the president's proposal to raise taxes on people over $250,000 is very popular with the american public. 59% in our poll say they're for it. 76% say it would be an acceptable outcome. the one thing that republicans have going for them in the debate is the public likes the idea of spending cuts. so while the president puts public pressure on republicans, he's trying to respond in kind and say president obama has not detailed the spending cuts he wants. of course, republicans have not detailed the spending cuts either because the place you get real money, melissa, is in the entitlement programs of medicare
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and social security, and those are very popular. so nobody really wants to lay out too many specifics. republicans have laid out some, saying they would raise the eligibility age for medicare from 65 to 67. saying that they would change the inflation adjustments for social security and other government programs to make them less generous. those are things that are difficult to do. the american public doesn't want them. but money needs to be raised beyond those. and neither side wants to detail those. and so speaker boehner's trying to leverage what influence republicans have by talking about the needs for spending cuts. >> at the same time if the president is going to take his cue from what the public is telling him in that he has a mandate to raise taxes, won't he also take a cue from some of the recent public opinion polls, most notably the "wall street journal"/nbc poll, two thirds want him to cut the budget even if it means cutting social security and medicare? >> reporter: yes. and the president said he's willing to cut those programs,
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but he has laid out his tax increase proposal. republicans say they want spending cuts. so the president is saying okay, tell me exactly what you want and i'll valevaluate them. republicans haven't gone all the way. and what they're trying to do is get the president to take ownership of those unpopular spending cuts as a way of opening the negotiation. that's why this is so difficult is because the public is so opposed -- they like the idea of spending cuts in general, but when you get to specific cuts in medicare and social security, those are overwhelmingly unpopular. >> so just to be clear, from obama's perspective since he seems to hold the balance of power at the moment with the fiscal cliff expiring, what does boehner have to say to unlock the negotiations? does he have to say, i would cut this, this and this and nail his colors to the mask and take the flak for that? is that where we are? >> reporter: from the white house point of view, what john boehner and the republican leadership needs to do is say
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unequivocally yes, we're going to raise tax rates on people at the top. if they'll say that, not just say we'll raise more revenue, but if they agree to tax rates, then the administration will get more serious. they might still try to make the republicans outline the entitlement changes they want. but that, for the white house, is the precondition to negotiations. the problem is that that's very difficult for john boehner to do as the leader of the republican caucus. members don't want to go there. so to preserve his speakership, to preserve his influence over his caucus, he's trying to get the white house to agree to some spending cuts up front before the negotiations get more serious. >> how does the politics stack up? higher marginal tax rates. can they get through the gop? can they get through the house? >> reporter: i think so in the end, but what boehner and his people will tell you is that if they're going to get through, we've got to get some big spending cuts from the president in entitlement programs, and
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they're trying to get the president to take some of the political heat for those. >> john, we'll come back to you in a moment as soon as speaker boehner speaks in washington. in the meantime, let's link in with gary cominski for this morning's op-ed. good morning. ou today?orning. >> i'm well. >> aren't you going to ask how i'm doing? >> good morning to you, melissa. i'm sorry. gary, we have a picture of you. you're supposed to read that. gary, we have a picture of you. that was you. >> let me do it. okay. gary, we have this picture of you from last night's 12-12-12 benefit concert. and i understand you have some thoughts on how the sandy benefit concert, the fiscal cliff, and indeed taxes. >> and i do. by the way, listening to mr. harwood just now, it was a perfect segue in front of mr. boehner coming up. let me tell you why. if you watched that -- and i know close to 1 billion people watched -- i couldn't help but think during the entire thing robin hood foundation, obviously if you know who robin hood
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foundation is, you know it's many of the major hedge funds, major players in the financial services. one of the greatest takeaways that i had walking out of that building, obviously the great entertainment was the following. when it was in the time of immediate need, it wasn't the government agencies. it wasn't fema. it wasn't the tax dollars going to the government to help people. it was the charities like robin hood that was immediately there. you saw it with the sanitation. you saw it with the first responders. and let me tell you what i thought about last night. i am sick and tired -- sick and tired of people like nancy pelosi and harry reid sitting here attacking the wealthy for more taxes. bring it on, they'll say. bring it on. but these are the most charitable people in the world. i'm not going to name names. but if you watched that concert last night and you saw the people that were there and you could go to the robin hood foundation organization website, guess what, harry reid? those are the people that give their money away to help people.
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and i leave it at that. and that's what the fiscal cliff and taxes and charity have to do with the benefit last night. >> i suppose if harry reid or nancy pelosi were here, and they're not here, i wish some of them were, to respond to what you're saying. >> they don't give money to charity. they don't give money to charity. >> do you know that definitively? >> no, i don't, but i'm making the assumption that i believe that if you look at the nature of what they do and what they say, if i am wrong, harry reid, bring it on, baby. send it to me. >> but they might say one of the reasons they have the money to give is because they're taxed at only 15%. >> i'm not going to get into that, simon. the fact of the matter is -- >> that's the discussion that boehner -- that's precisely the discussion that's happening behind what we're seeing here as we await boehner to take the stage. what should we tax people at? that's the issue. >> i don't want to get into this. that's not my point. my point was simple. the most charitable people in this nation are the wealthiest
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pee people in this nation. talk about a flat tax. if you had a flat tax and everybody was taxed the same percentage and not whether or not that's right or wrong, my point is on a relative percentage basis, the wealthy give more of a percentage of their income than anybody else to charitable endeavors. that's what last night was about. that's what people in the immediate need need. that's what it was about. >> do you think that would stop if taxes went up? it would be impeded? >> i will tell you this. if you spoke to those that are involved with raising of charitable funds, the biggest fear they have post-fiscal cliff is that those that have to find other ways to supplement their income, charity will be the first area that is hit. >> gary, good to see you. we'll come back to you. >> great points. >> thank you, our capital markets editor. >> again, we are waiting for speaker of the house, john boehner, to take that podium. meantime, we'll take a quick break. but john boehner's just on the other side. stay tuned. for more than 116 years, ameriprise financial has worked for their clients' futures.
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republicans have signaled our willingness -- >> house speaker john boehner just starting to speak on capitol hill. let's listen in. >> that is truly balanced and begins to solve our spending problem. the president still has not made an offer that meets those two standards. but republicans have. while the president promised the
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american people a balanced approach, his proposals have been anything but. he wants far more in tax hikes than in spending cuts. and instead of beginning to solve our debt problem, he wants new stimulus spending and the ability to raise the debt limit whenever he wants without any cuts or reforms. it's clear the president's just not serious about cutting spending. but spending is the problem. how big a problem? look at this chart put together by paul ryan and the budget committee. this line is the current baseline for revenue. here if the president got everything he wanted, over $1.4 trillion in taxes, this is what that would represent. but if you look at the spending problem, you see it does nothing. nothing to solve the spending problem that our country has. listen, republicans want to solve this problem by getting the spending line down.
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the president wants to pretend that spending isn't the problem. that's why we don't have an agreement. the chart depicts what i've been saying for a long time now. washington has a spending problem that can't be fixed with tax increases alone. the right answer is to start cutting spending, addressing our debt and paving the way for l g long-term economic growth. unfortunately the white house is so unserious about cutting spending that it appears willing to slow walk any agreement and walk our economy right up to the fiscal cliff. doing that puts jobs in our country in danger, jeopardizes a golden opportunity to make 2013 the year that we enact fundamental tax reform and entitlement reform to begin to solve our country's debt problem and frankly revenue problem.
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as you can see from this chart, real revenue growth is critically important as long as real cuts in spending if we're going to solve our long-term fiscal problem. as i said five weeks ago, the election wasn't a mandate to raise taxes on small businesses. it was a mandate for both parties to work together to take on the big challenges that our country is facing. republicans are ready and eager to do just that. we made a reasonable offer. it's now up to the white house to show us how they're going to cut spending and give us the balanced agreement that the president has talked about for weeks. the president will step up and show us he's willing to make the spending cuts that are needed, i think we can do some real good in the days ahead. if not, he wants to keep chasing higher spending with higher taxes, this chart's going to look a whole lot worse. and our kids and our grandkids
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are the ones who are going to suffer because washington was too shortsighted to fix the problem. >> several reasons, about 75% have said that the tax rates for the upper income earners should expire. why are you holding out for a tax cut for the wealthy, but most americans, even many wealthy people, say we shouldn't have? >> raising tax rates will hurt small businesses at a time when we're expecting small businesses to be the engine of job creation in america. ernst & young has made it clear, if we were to do what the president is asking for, some 700,000 jobs would be at risk. it's as simple as that. >> mr. speaker, we've been here late in december over the past several years on payroll tax, health care, 9/11, a myriad of issues. why is it every christmas, why do we do this every single year, no matter what year? >> well, we really shouldn't be.
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i argued going back to spring that this issue had to be dealt with. that's why in may the house moved a bill to replace the sequester with other cuts in mandatory spending. why in july the house passed a bill to extend all of the current tax rates. i've been pushing all year for us to address this problem. but here we're at the 11th hour, and the president still isn't serious about dealing with this issue right here. it's this issue. spending. now, you go back to -- and i want to talk about polling, most americans would agree that spending is a much bigger problem than raising taxes. they want us to deal with this in a responsible way. >> that's my point. whatever the issue is, it takes this long each year in december to get these things done. >> unfortunately, that is the case that we're dealing with today. >> would you say categorically
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you would not put a bill on the floor to raise the lower brackets at any point this month? >> i don't quite understand what the question was. >> would you say categorically that you will not decouple the lower rates? >> the law of the land today is that everyone's income taxes are going to go up on january the 1st. i've made it clear that i think that is unacceptable. but until we get this issue resolved, that risk remains. >> mr. speaker, could you describe how difficult it is to craft a deal that your conference will support while not jeopardizing your job as speaker? >> i'm not concerned about my job as speaker. what i'm concerned about is doing the right thing for our kids and our grandkids. and if we don't fix this spending problem, their future is going to be rather bleak. >> -- spending cuts on the table. they say that you know what they
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are. are they just not -- >> they've put some spending cuts on the table. unfortunately, the new stimulus spending they want almost outstrips all of the spending cuts that they've outlined. >> mr. speaker, there has been talk about a purge list that has been created over in the steering committee. and people have been wanting to know if some of this could be released -- >> there is no such list. >> mr. speaker, let me try again with what jake was asking. right after the election, you said increasing tax rates was unacceptable. and since then you've been less definitive in the language you've used. and you say things like you oppose idea. well, that's what you said before the election. >> i do oppose the idea. >> right. will you permit a vote on a bill that will go over the cliff? will you prevent a vote to
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decouple them? >> ifs, ands and buts are like candy and nuts. if that were the case, every day would be like christmas. i know, it's going to be here real soon. my goal is to get to an agreement with the president of the united states that addresses this problem. >> do you think that the closer you get to the deadline, you might actually be able to get the spending cuts you want? >> i have no idea. >> mr. speaker, leader reid has made it clear that he agrees with the president about the debt limit, about giving the president the authority to do that unilaterally. if he does that, does that complicate your efforts to enforce next year if they're united -- >> do you think that senator reid or then-senator obama would have ever given, to president george w. bush, the unlimited ability to raise the debt limit? >> they're talking about doing it now. >> i know they're talking about doing it now.
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do you think there's any chance that senator reid or then-senator obama would have done that? zero. congress is never going to give up our ability to control the purse. and the fact is, the debt limit ought to be used to bring fiscal sanity to washington, d.c. >> last question. >> mr. speaker, last week the supreme court reviewed the defense of marriage act. as you know, house republicans are in defense of that law. there was a $1.5 million cost cap outside counsel to fund that, but according to house democrats, that cost cap has decreased. do you is not the idea of raising that to pay for it? >> if the justice department is not going to enforce the law of the land, the congress will. thank you all. >> there's house speaker john boehner walking off the podium after handling a number of questions. what he seemed to underscore is the fact that there has not been
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much progress made. he said it is clear the president has not committed to cutting spending. the president needs to step up at this time and that the president is intent on slow walking the economy right up to the edge of the fiscal cliff. as for market reaction, markets taking a little bit of a pause here. we're off the session lows at this point. what was notable, though, was a pop in the volatility index. and that was up by 2% at last check. let's bring in john harwood to get more reaction to what speaker boehner just said. john. >> reporter: melissa, i think the notable thing the speaker said, while pressing the case on spending, as you mentioned, and as we talked about before the news conference, was that he did not rule out decoupling the lower income tax rates, that is the tax rates on incomes below $250,000, from those higher than that. that is critical because that's what the president is seeking. he's seeking to extend the tax cuts for people who make less than that amount and eliminate them for people who make more. that's the linchpin of his revenue proposal to avert the
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rise in tax rates for everyone. and it sounds like john boehner is edging toward that point. he said -- he was asked specifically if he would allow it. he said well, i'm not going to deal with hype thekts and ifs ands or buts but i want to reach a deal with the president. he also acknowledged that we have a revenue problem. that was significant. of course, he retreated, then, to the turf that republicans are strongest on, which is the general idea of spending cuts. the question is, of course, what are the specifics on medicare and social security? >> john, what do you think the next steps are? because he's clearly putting it into the president's court at this point. >> reporter: i think the next steps are the president's going to try to continue leveraging his advantage in public opinion, wait for more cracks in the republican unity on taxes which we've seen slowly expanding, and then there's the private negotiations that are going back and forth. the president and the speaker are exchanging ideas about how
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far can you go? how far can i go? and i think there's a part of this that we will not see at all, but publicly the president's going to keep pushing the pressure on confident that he's winning this argument right now. >> john harwood at the white house. just before we go to break, gary is still with us. we were talking about how america gives a moment ago. middle-class americans are twice as generous as the rich. philanthropy.com says those earning less than $75,000 pay 7.6% of their income. those earning above $100,000, just 4.2%. >> because you're referring to income. remember, that's taxable income. >> percentage. >> no, you were talking about w-2 taxable income. the great bulk in the 1%, simon, that money is coming through capital gains. that's a huge difference. you're talking about an ari
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welcome back to "squawk on the street." i'm phil lebeau with breaking news regarding boeing and the 787 dreamliner. there has been a second dreamliner that has run into problems, once delivered into service, this one solving a cutter airway 787 on delivery from the united states to london. just a few days ago. it has been grounded in london. according to the ceo of cutter
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qatar airways, he says that the airplane developed a generator failure while in flight. now, it was not an emergency landing but a generator failure is what he says. we've talked with boeing this morning. they say they are aware of the issue. they're not sure it was a generator that failed on the qatar airways 787, but the significance of this is remember on december 4th, it was a united 787 that had to make an emergency landing in new orleans because one of the generators failed on that airplane. there are six on these airplanes. and remember, the 787 was designed to use six generators, electric power so that near nth not using power from the engines, part of the fuel efficiency that goes into the planes. the question is there a problem with the 787s? we have a call into boeing. we're hoping to have more details regarding this incident. again, this is a 787 from qatar airways that was en route from the united states to london when this happened. melissa? >> phil, is it too early or
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maybe too late given planes are ordered well in advance to think that airlines might be considering canceling their orders of dreamliners? >> no, i don't think we're going to see cancellations. i think what you'll see more than likely is airlines are going to put pressure on boeing. and boeing's putting its own pressure to say let's figure out what's going on here. if there's a systemic problem. >> right. all right, phil, thanks for that. fascinating story with the stock. now down about 1%. phil lebeau from chicago. well, the senate is scheduled to consider extending the transaction account guarantee program today. now to rick santelli in chicago with more on that. hey, rick. >> reporter: hi, melissa lee. definitely that is bill in the senate 3637. and exactly right about now, they are debating that extension. our guest is a former adviser, economic adviser, to president clinton and senator barack obama, dr. robert shapiro, welcome. >> hi, rick. glad to be here. >> reporter: all right. dr. shapiro, it seems so
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ironic -- and i've used that word twice -- to listen to boehner worry about fate of generations down the road. at that particular point in time, this particular point in time, why does the senate want to guarantee a taxpayer expense, a program that is as large as $1.6 trillion? is there any reason you can think of? >> well, the only reason is that some banks think that if they have the guarantee, they'll get more of these deposits. the fact is, this is bad for the economy. it's bad for the banking system. there's a basic principle of deposit insurance. and that is you want to cover almost all depositors but not all deposits. and so you put a limit -- the limit has been $250,000. so the insurance coverage goes up to $250,000. that covers over 99% of all depositors. but it only covers 78% of deposits. and that means these very large
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institutions with big deposits, they get insurance only up to $250,000. and that gives them an incentive to make sure that banks are handling their funds properly. and it gives banks an incentive to take risks only when they're pretty sure they're going to work out. that's what you want in a deposit insurance system. now, during a crisis, during a financial panic, when people are pulling money out of all banks because they can't tell which banks are safe and which are not, then you want to temporarily raise this as we did in 2008. but the banking system is back to pre-crisis profitability. we don't need this. this would be really a subsidy, i think, largely for community banks. you know, the fact of the matter is the large banks don't really
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want this unlimited coverage because it raises their deposit fees. and that's why they don't want it. we shouldn't want it because it increases moral hazard, makes a banking crisis more likely by saying to banks no matter what you do, we're going to guarantee all of your deposits. >> well, i love the way you summed it up. you know, this was passed during the t.a.r.p. time, 2008. it was extended several times. >> yes. >> it was embedded in dodd-frank. so it isn't like the sunset hasn't had a couple of final epilogue chapters. let me summarize something and then you get the last word. >> okay. >> the problem i see is whether it's what the fed's doing with these programs, whether it's all the programs during a crisis, that extricating these subsidies, they become sort of the everyday involvement of whatever business you're impacting. there is a lesson to be learned there, isn't there, doctor? >> of course there is. and look, nobody wants to give
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up subsidies. that's why tax reform is so difficult. but we have to think about the bigger picture, which is not what's good for one group or another that can get to congress or can get to the regulators, but what's good for the overall economy because that's what's good for average americans. >> thank you. we're running low on time. i want to watch the final progress of this bill. we might have you back next week. thank you for being on cnbc. melissa, back to you. >> thank you very much, rick santelli. meantime, a regional newspaper making national headlines today. best buy founder richard schulze is ready to take his company private. he will submit his bid this week to the board of directors. the offer is said to be at least $5 billion to $6 billion. the market cap currently just under about 5. the shares have bolted higher, not least as people cover some of those shorts. thomas lee is the reporter who broke that story, and he joins us now. welcome to the program. >> thank you.
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>> and you've really moved the stock today. what exactly are you saying? what exactly have you found out? >> well, we found out that an offer is definitively coming from schulze's group by the end of this week. now, the deadline, multiple sources have told us, is december 16th. now, schulze asked and received a 30-day extension in mid-november, but those sources tell me that this is it. either get an offer in or it's not coming. >> still quite loose on where that price might be, though, from what you seem to be saying. >> yes. i mean, there's, of course, a lot of numbers being thrown out, but in terms of what the final number might be, it might change at the last minute, but that's what we know at this point. >> thomas, could this be a placeholder to get a bid in under the deadline and then for them to have some more time, maybe a month or so after that to submit another bid after there's a better sense of how holiday sales went? >> you know, that is the big question of the moment. one of the reasons why they
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wanted to wait from mid-november to now is to get a sense about holiday sales would do. now, you know, a few months ago, i would have said that they would probably make a second off. sources told me that the company was sure to reject the first offer. now i'm not so sure anymore because things have changed in terms of the tone between schulze's camp and the company. a few months ago it was adversarial when they laid out this buyout process. but under the new ceo, it seems they're getting along a little bit better. ebert has gone out of his way to praise schulze. he's even secretly met schulze along with brad enarson a few weeks ago in minneapolis. i wouldn't discount a possibility that they may do it on a friendly basis.
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>> talking to people behind closed doors, what is the rationale behind offering a premium for a company which could see declining sales in its cash-low position decline over time? i'm just trying to get a sense of what exactly they see in this company of value to make them put a premium on the stock which seems to have been in free-fall recently? >> that's a good question. now, for all of best buy's troubles, i really doubt that the company is going to go bankrupt any time soon. they have strong cash flow, about $2 billion of free cash flow a year. they have strong assets. they have best buy mobile, which is performing very well. they have geek squad. and they have a fast-growing chain in china. so for all its problems, i do believe that schulze believes that there is things that they can do to save the company and not only save it but make it prosperous. >> just before we let you go, do you have any appreciation as to what might be an acceptable offer? i mean, are there figures being bandied around from the other side? >> yeah.
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we've heard that best buy would be comfortable with $20 a share. now, whether or not they get that or not, i don't know. but i think it's interesting that the buzz is out there that the company would be open to $20 a share. you certainly would have heard that just a few months ago when this whole process started. >> thomas, congratulations on your exclusive. it's good to see you. thomas lee from "the minneapolis star-tribune." thank you. >> thank you. speaker boehner coming out just moments ago saying the president needs to step up in the fiscal cliff negotiations. the democratic leadership is preparing to respond. we will bring you comments from senators harry reid and dick durbin. that is live, and that is coming up. the "cnbc realtime exchange market snapshot" is brought to you by interactive brokers.
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it is time for another capital markets op-ed. buybacks. >> you guys covered this yesterday at great length. i hoped to look at some of the newspapers today, "the wall street journal" was the only newspaper somewhat critical about this. look, warren buffett will be buying back stocks. he was never going to buy back stock or split the stock. he was never going to put the stock in the s&p 500. if this is not hypocritical to
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the maximum level -- no, no, no. he has changed. >> oh, a long time ago. >> a long time ago. never believed in buybacks. never would split a stock into the "b" shares and would never go into the s&p 500. you don't want closet indexes owning the name. that's some of the hypocrisy. but given the fact that he took out one of the early investors in this stock before the capital gains tax goes up, i mean, really? come on. if this wasn't buffett, this was a clear, clear violation of that so-called nancy pelosi, let's try to tax the wealthy people as much as we possibly can. and why is it that the general media refuses to call bev fuffe out on this? i don't know, but it upsets me. >> wait till next year and you pay higher taxes because i believe the tax rate should go higher. do you think warren buffett is writing a check to the government for this year's taxes because he thinks he should pay higher taxes?
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no. >> the seller wanted an incentive to have the higher capital gains in this year. my point is that buffett made it quite easy for his friend to be able to pay less taxes to the government. and we're in a, as you clearly saw from the boehner press conference, we're in an environment where the wealthy people, somebody who sells a billion dollars worth of stock should pay the most taxes. >> that he didn't want to see 9200 shares of class "a" stock all at once and cause panic? >> could have been. could have been. but come on, folks in the general media, folks at "the new york times," be a little more hypocritical of mr. buffett, please. i beg you. i'm done with my nasty stuff today. >> warren buffett is almost sacred. >> not to me, simon. >> there are no sacred cows. you know that. >> not to me. he's an investor like anybody else. >> keep those tweets coming. ben bernanke celebrating his 59th birthday today. we want to know, what do you think bernanke will be wishing
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for when he blows out his birthday candles which, of course, is what you do if you're on the board of the fomc? tweet us, @squawkstreet. we'll read some of your answers next. sors. can i help you? i heard you guys can ship ground for less than the ups store. that's right. i've learned the only way to get a holiday deal is to camp out. you know we've been open all night. is this a trick to get my spot?
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[ male announcer ] break from the holiday stress. save on ground shipping at fedex office.
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[ male announcer ] break from the holiday stress. ...so as you can see, geico's customer satisfaction is at 97%. mmmm tasty. and cut! very good. people are always asking me how we make these geico adverts. so we're taking you behind the scenes. this coffee cup, for example, is computer animated. it's not real. geico's customer satisfaction is quite real though. this computer-animated coffee tastes dreadful. geico. 15 minutes could save you 15 % or more on car insurance. someone get me a latte will ya, please? let's get to it. time to "squawk on the tweet." fed chairman bernanke celebrating his 59th birthday this morning.
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that brings us to this morning's "squawk on the tweet." what do you think bernanke will be wishing for when he blows out his candles? "ben's birthday wish is for a fiscal cliff parachute." >> for everyone. >> a.j. tweets, "a light bulb for congress and the white house." >> how many does it take to screw it in? >> toner cartridges. >> to keep printing. >> yes, the money. let's check on solar city, trading sharply higher. we're at $10.93. price ultimately at $8. a strong opening after they lowered the price below the indicative range. so that will please a lot of people who were worried about that. what are we looking for on "fast money"? >> we'll have a huge discussion on real estate and the fiscal cliff. we've got dolly lynns of prudential and she'll tell us about all the sales happening right now. it's a crush of sales, in fact, as we approach that looming fiscal cliff. >> which end of the market? the top end of the market? >> the highest end of the market. we'll have a little real estate porn sprinkled in there